Company Formation Specialists

Right To Manage Company (RTM)

Right to manage companies allow flat owners (i.e. tenants, leaseholders
etc) to take over the responsibility for the management of their
building. If you live in a building where the freehold is not
already jointly owned by you and your fellow leaseholders, you
can now take advantage of the new rights to buy the freehold or
to manage the building yourselves.

The process is referred to as Right to Manage (RTM), hence the
name Right to Manage Company and was brought about by the Commonhold
and Leasehold reform Act 2002. The act offers leaseholders a greater
degree of security and control over their homes.

RTM's do not require tenants to prove any failings of the
landlord in respect of the management of their property. RTM companies
are classified as a private company limited by guarantee formation
(non profit making). Its memorandum and articles of association
must match that prescribed by legislation. These are in a long
form, as Table A of the Companies Act 1985 is specifically disapplied
by the Act.

All RTM company formations end with ".....RTM Company
Limited" followed by the address of the property.

The criteria for forming an Right To Manage Company are as follows:

The building must be self-contained or capable of being redeveloped
independently.

Minimum of two flats must participate.

At least two thirds of the flats must be let to qualifying
tenants, ie tenants with a long lease of more than 21 years.

The RTM company must be comprised of at least 50% qualifying
tenants of the building before it can manage the property. The
minimum number of qualifying tenants must be equal to no less
than half the total number of flats on the premise.

The premises may be part commercial as long as it does not
exceed 25% of the total floor area.

The formation of a Right to Manage Company and the appointment
of the company directors and secretary is the first of a set procedure
to be followed before tenants can begin to manage their own affairs.
The entire process will take a few months. It is important to
ensure that professional guidance is sought each step of the way
as minor errors can further delay matters.